The Dollar Factory

Google did not innovate in 2006 but can they do it in 2007?

Google is by far the most loved technology company operating today. Techies love it for the numerous online tools that Google provides for free. Business people love it because it is a highly profitable company with a soaring stock price. During the last ten years, Google grew from a small, graduate student project to a multi-billion dollar company because of its innovative search engine algorithm. Many still praise Google for its strength in delivering new, ground-breaking technologies that could change the world. Google has hired some of the brightest people in an effort to meet everyone’s expectations. So, what has Google done with all this talent and money during 2006?

Google has been very active improving and developing new software and online services while acquiring Web 2.0 startups. Many engineers are continuously improving Google’s search engine, AdSense and AdWords algorithms in an effort to better index the information available online and improve revenue from their online advertising business. They have also developed a number of new online applications including Google Calendar, Checkout, Co-op and Apps for Your Domain. They also started selling domain names and updated Blogger and Google Reader. In terms of acquisitions, most notably, Google paid $1.65 billion for YouTube and Wiki collaboration company Jotspot. Google also officially was added as an English word in the Oxford English Dictionary. On the other hand, Google shutdown their Answers service and admitted that Google Video was a failure.

So, Google was a company on the go last year and that is great news, especially for its stock holders. The only problem in my mind is that, contrary to popular belief, Google didn’t really innovate last year. I don’t think that they have introduced any new and exciting technologies since the original search engine algorithm and contextual text advertising system.

In fact, I would not call any of the activities listed above as innovative. Google Calendar is just a calendar application and Google Checkout is just a PayPal clone. The personalized Co-op search engine is again just a clone of similar search engines already available by others such as Rollyo. The updates to Blogger and Google Reader were welcomed but mostly aesthetic and long overdue. YouTube and Jotspot so far have remained independent and nothing has changed since their acquisitions.

In the meantime, Google has failed to add any new sources of significant revenue to complement their online advertising programs. Google’s profits and stock price soared this past year because of the large increase in AdWords and AdSense revenue. Google’s efforts to enter the print and radio advertising business have failed to match their AdWords revenue.

Unfortunately, Google’s online advertising programs have been under constant attack by advertisers who feel that much of the money they pay Google is wasted on click fraud. Google’s secrecy and reluctance to openly deal with a growing number of dissatisfied advertisers complaining about click fraud hasn’t hurt their business yet but it might in the near future.

In my opinion, it is about time that Google puts all those PhDs to work to come up with some killer applications before it is too late for them. If Google does not meet Wall Street’s expectation for one of the coming quarters, I would not be surprised if their stock price plummeted. Of course, if that happens, the entire Internet economy will follow suit.

So, in what areas can Google innovate in 2007?

For starters, I would like to see them fix their search engine algorithm to better filter spam sites; if their entire business model depends on their search engine then maybe they should consider fixing it. Google should make a stronger effort to help with the development of the semantic web. It is the future and they know it so they should help make it a reality soon for the benefit of all of us. In addition, Google should finally update and improve their image search algorithm. Many new companies are coming up with new search engines that categorize images using state-of-the-art computer vision algorithms. When is Google going to do something that is better than indexing images according to their caption text? Furthermore, Google should finally deal with click fraud in cooperation with advertisers and webmasters. Establish clear guidelines of what constitutes click fraud and allow trusted webmasters to report fraudsters.

Finally, I hope that the rumors about GDrive will become true and that Google will do something useful with their NASA partnership. I really don’t care if they create a new operating system because we have enough of those already. Also, there is no need for the rumored Google TV and the Google phone. Apple is working hard on getting those delivered to us and I am sure that whatever they do will be hard to beat.

Google, you wasted 2006 so please do something great in 2007!